Fi­nan­cial mar­kets look­ing to fu­ture eco­nomic events to lead the way

As we be­gin to wind down and turn to the fi­nal trad­ing weeks of the year, fi­nan­cial mar­kets will be leav­ing macro-eco­nomic re­leases on the side­line and will in­stead closely mon­i­tor up­com­ing key global event risks.

These are not limited to and in­clude the highly-an­tic­i­pated meet­ing be­tween US Pres­i­dent Trump and Chi­nese lead­ers at the G-20 sum­mit this week­end in Ar­gentina. Trade is­sues will have in­vestors glued to their seats for po­ten­tial head­lines from this meet­ing. The next ma­jor risk, one week af­ter, will be the OPEC meet­ing in Vi­enna fol­lowed by the UK Par­lia­men­tary vote on Brexit in ap­prox­i­mately two weeks’ time.

These events are con­sid­ered as mas­sive po­ten­tial risks for fi­nan­cial mar­kets, and might en­cour­age traders to stay on the side­lines un­til there is guid­ance on how these events are go­ing to un­fold. Over the in­terim, there is no dis­put­ing that the sched­uled meet­ing be­tween Trump and Chi­nese lead­ers to dis­cuss pro­longed trade ten­sions is the most se­ri­ous risk for fi­nan­cial mar­kets to­day.

A res­o­lu­tion to those trade ten­sions would be the best medicine that risk ap­petite and global eq­uity mar­kets can re­ceive at this time.

How­ever, if the meet­ing does not con­clude with a pos­i­tive end­ing then we can ex­pect the risk of a re­newed risk-off at­ti­tude from in­vestors next week.

Fo­cus­ing back on macro-eco­nomic re­leases, the up­com­ing trad­ing week will be filled with key re­ports from the United King­dom and the United States. Man­u­fac­tur­ing PMI fig­ures from the UK will be in fo­cus on Mon­day fol­lowed by ISM Man­u­fac­tur­ing PMI fig­ures from the States in the af­ter­noon.

In­vestors are seen keep­ing a very close eye on the UK Ser­vices PMI re­leased on Wed­nes­day which should pro­vide in­sight into the health of the UK econ­omy.

In the United States, there will be a spe­cial fo­cus on the US jobs re­port on Fri­day. A block­buster NFP fig­ure cou­pled with signs of ris­ing wage growth could re­vive ex­pec­ta­tions of higher US rates be­yond De­cem­ber. With the Fed pol­icy re­volv­ing around data de­pen­dency, the Dol­lar is seen dis­play­ing high lev­els of sen­si­tiv­ity to the pend­ing NFP re­port.